The U.S. and Iran are moving closer to a limited, temporary agreement to halt their war, sources and officials said Thursday, with a draft framework aimed at ending the fighting while leaving major disputes unresolved.
The emerging plan centers on a short-term memorandum rather than a comprehensive peace deal, underscoring deep divisions between the two sides and signaling that it would be an interim step.
Hopes that even a partial deal could lead to the reopening of the Strait of Hormuz have already moved markets, with global stocks approaching record highs Thursday and oil prices nursing steep losses on bets that supply disruptions could ease.
Tehran and Washington have scaled back ambitions for a sweeping settlement as differences persist, particularly over Iran's nuclear program – including the fate of its highly enriched uranium stockpiles and how long Tehran would halt nuclear work.
Instead, they are working toward a temporary arrangement aimed at preventing a return to conflict and stabilising shipping through the strait, the sources and officials said.
"Our priority is that they announce a permanent end to war and the rest of the issues could be thrashed out once they get back to direct talks," a senior Pakistani official involved in mediation between the two sides told Reuters.
The proposed framework would unfold in three stages: formally ending the war, resolving the crisis in the Strait of Hormuz and launching a 30-day window for negotiations on a broader agreement, according to the sources and officials.
"We remain optimistic," Tahir Andrabi, Foreign Ministry spokesperson of mediator Pakistan, told a briefing in Islamabad Thursday when asked how quickly a deal could come.
"A simple answer would be that we expect an agreement sooner rather than later."
U.S. President Donald Trump – who has repeatedly played up the prospect of a breakthrough since the war began on Feb. 28 with U.S.-Israeli strikes on Iran – has also struck an optimistic tone.
"They want to make a deal ... it's very possible," he told reporters at the White House Wednesday, adding later that "it'll be over quickly."
The proposal would formally end the conflict in which full-scale warfare was paused by a cease-fire announced on April 7. But it leaves unresolved key U.S. demands that Iran suspend its nuclear work and reopen the Strait of Hormuz, the sources said.
Israel, which has also been fighting Iran-backed Hezbollah in Lebanon, said Thursday it had killed a senior Hezbollah member in an airstrike on Beirut a day earlier, the first Israeli attack on the Lebanese capital since a cease-fire there was agreed last month.
Hezbollah triggered its latest conflict with Israel by opening fire in support of Iran on March 2. A halt to Israeli strikes in Lebanon is another key Iranian demand in Tehran's negotiations with Washington.
Iranian officials signaled scepticism over the U.S. proposal to end the wider war. A Foreign Ministry spokesperson said Tehran would respond in due course, while lawmaker Ebrahim Rezaei described the proposal as "more of an American wish-list than a reality."
Iran's parliament speaker, Mohammad Bagher Ghalibaf, appeared to mock reports that indicated the two sides were close, writing on social media that "Operation Trust Me Bro failed” and portraying the talks as U.S. spin after its failure to reopen the Strait.
Reports of a possible agreement pushed Brent crude down by 3% to around $98 a barrel, having tumbled nearly 8% Wednesday.
Global share prices also rose and bond yields fell on optimism about an end to a war that has disrupted energy supplies.
"The contents of the U.S.-Iran peace proposals are thin, but there is an expectation in the market that further military action will not take place," said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management.
Trump on Tuesday paused a two-day-old naval mission aimed at reopening the blockaded strait, citing progress in talks.
NBC News, citing two unnamed U.S. officials, said Trump decided on the pause after Saudi Arabia suspended the U.S. military's ability to use a Saudi base for the operation.
Saudi officials were surprised and angered by Trump's announcement that the U.S. would help escort ships through the Strait, leading them to tell Washington they would deny the U.S. permission to fly military aircraft out of a Saudi base or through Saudi airspace, NBC reported.
The White House did not immediately respond to a request for comment on the report.
The U.S. military has kept up its own blockade on Iranian ships in the region. U.S. Central Command said forces fired at an unladen Iranian-flagged oil tanker Wednesday, disabling the vessel as it attempted to sail toward an Iranian port.
The source briefed on the mediation said the U.S. negotiations were being led by Trump's envoy Steve Witkoff and son-in-law Jared Kushner.
If both sides agreed on the preliminary deal, that would start the clock on 30 days of detailed negotiations to reach a full agreement.
The sources said the memorandum did not mention several key demands Washington has made in the past, which Iran has rejected, such as limits on Iran's missile program and an end to its support for proxy groups in the Middle East, including Hezbollah.
The sources also made no mention of Iran's existing stockpile of more than 400 kilograms (900 pounds) of near-weapons-grade uranium – one of Washington's central concerns.
